Riordan Week 4 Chain Supply OPS 571 Essay

1625 Words Apr 16th, 2014 7 Pages
Riordan Manufacturing: Supply Chain Design Paper Riordan Manufacturing, a leading global manufacturer of plastic containers, parts, and fan parts, is wholly owned by Riordan Industries, Inc. Riordan’s fan manufacturing plant was purchased in 1992 when it was located in Michigan. In 2000, the company moved its fan manufacturing operation to China where it now resides. Riordan schedules manufacturing of fan parts based on forecasted production needs using an averaged three year sales history. Riordan’s make-to-stock system benefits customers who need products quickly with orders filled from inventory when received. Riordan employs a robust shipping department including a variety of reliable shipping solutions from the …show more content…
This facilitates aggregate planning and production scheduling in anticipation of customer demand and product positioning at decoupling points along its global supply chain. Although Riordan uses 3-year average sales data to forecast, only 2005 (one-year) sales invoices were available.
A linear regression with trend decomposition technique was used. This is based on the intended time horizon (12 months) and 12 months of sales data. Figure 1 plots the average electric fan sales by quarter for 2005. The figure revealed both linear and seasonal trends and justifies the decision to provide a medium-term forecast, as this allows capturing seasonal effects which are useful in identifying major turning points. The seasonal factor for each quarter was calculated using 2005 sales data.
Figure 1. Average Units of Electric Fans Sold by Quarter of 2005

Sales Forecast
Electric fan sales are driven by dependent demand of the products, and sale of appliances are influenced by housing market strength. According To Riordan’s economic forecast, the data and forecasts related to mortgage rates and housing starts is positive in the near term, suggesting that the demand for electric fans will continue to be strong (Riordan’s Economy Outlook, 2006). Therefore, a 10% increase in sales forecast for 2006 is reasonable. However, our forecast indicates a decrease in sales for 2006.

Table 1. 2006 Sales

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